WPP's Group M Pulled Its Entire Ad Budget From U.K.'s Channel 4
ITV, BSkyB and Channel 5 could see TV advertising revenue boosts of up to 30% in January, as they benefit from the continuing standoff between Channel 4 and WPP.
Group M, the media buying arm of Sir Martin Sorrell's WPP, which buys commercials for clients representing more than 30% of the total UK TV ad market, has shifted its bookings for January to rival broadcasters in a tough negotiating tactic aimed at getting a better airtime deal with Channel 4 for 2013.
As a result TV ad revenues at ITV1 are understood to be running at between 8% and 11% up year on year in January, according to multiple media buying sources.
BSkyB is thought to be up about 20% year on year and Channel 5, which was also hampered by an advertising boycott by clients of media agency MPG last January, is currently enjoying a 30% boost in TV ad revenue.
To put this in context the total TV advertising market for January, worth about £240m, is thought to be up by at most 2% year on year.
However, Channel 4's rivals could see the millions of pounds in extra TV ad bookings they look set to gain because of the dispute disappear if renewed talks with WPP result in a swift deal.
It is understood that Channel 4 and WPP are back at the negotiating table, the first time any meaningful contact and progress has been made since 21 December.
Group M has annual ad deals with each of the main broadcasters. If a deal with Channel 4 is reached swiftly it can adjust client spend at each broadcaster across the year so that there is no real benefit for rivals from gaining extra bookings from the dispute this month.
Channel 4's rivals had been hoping that the dispute might run until late January, or longer. If this occurs the deal between Group M and Channel 4 is more likely to be struck on the basis of just the remaining months of 2013.
This would effectively make the £20m Group M usually spends with Channel 4 in January extra money for rivals that could be banked.
The renewed talks do not necessarily mean that an agreement will be reached swiftly, but industry observers believe there is an imperative on both sides to get a deal done.
Group M's advertising clients, which include Ford and EE, are backing its position but will not want a Channel 4 blackout to persist.
WPP handles the £285m media buying contract for the government's annual marketing budget, and yet new year campaigns tackling obesity and smoking are not being seen by viewers of the UK's second-largest free-to-air broadcaster.
It is not known how much of the government's £285m budget is earmarked for TV ad spend.
Channel 4 also cannot afford the Group M dispute to continue for too long – the media buying group spends about £250m a year on advertising airtime with the broadcaster, close to a third of its total.
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This article originally appeared on guardian.co.uk
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